Having a credit card provides an easy and instant means of getting an
unsecured loan. If used sensibly, credit cards are valuable
tools to help manage your day to day finances.

There are many different credit cards available - through banks,
stores, dedicated credit card companies and other organisations.
Some charities and organisations not in the finance business may
offer cards (backed by dedicated credit card companies) from which
they receive some benefit.

How a credit card
works. When a purchase is charged to your card, the seller
receives payment from the credit card company less a percentage of
the price - this percentage should not be passed on to customers.
The price is added to the balance you owe to the credit card
company. Periodically (usually monthly) you receive a
statement from the credit card company showing your current balance.

There may be an
annual fee charged for possessing a credit card. Some
companies may waive the fee for good customers.

Payment will be
required some time after the date of the statement. There will
usually be a minimum amount to pay, or you can pay off the whole
balance, or any amount in between. If you do not pay the
minimum amount in time, or if you exceed your credit limit, you will
be charged penalties and may be prevented from using the card. For
most cards, if the whole balance is paid off by the due date, there
will be no interest charged. If any amount of the balance is
left unpaid by the due date, you will usually pay interest on the
whole of the statement amount. Even the best credit card
interest rates are high compared to long term loans.

Online ads and
links as included on this page are useful to compare credit card
rates and terms - check a few - before applying online.

Sensible use of a
credit card would include using the card to cover an emergency or to
take advantage of a bargain price on a planned purchase, and paying
off the full balance of the statement following your next pay day.

If not used
carefully, credit cards provide a dangerously easy means of building
up debts at relatively high interest rates. Do not think of a
credit card as a means of increasing your income: it may appear to
do this in the short term, but if you continue to use it to spend
more than you earn, your debts will snowball and the cost of
servicing your debts will reduce rather than increase your spending
power. If your do find yourself in difficulties, debt
consolidation or
credit card balance transfers may provide a
lifeline - but only if accompanied by lifestyle changes.